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UPDATE: Kentucky racing industry looks to New York

By Lombardo David
Tuesday, December 11, 2012

New York's symbiotic relationship between horse racing and casino gambling is a model that at least one other state is looking to replicate.

Today the state Assembly held a hearing on the impact of the state's nine racinos, which host electronic gambling machines, known as video lottery terminals, and thoroughbred or harness racing. The hearing focused on how revenues from the VLTs are used to supplement the state's horse industry and fund education.

Since 2004, when the first racino was created in Saratoga Springs, the facilities have accounted for almost $4 billion in education aid and about $750 million in assistance to the horse industry, according to James Featherstonhaugh, president of the New York Gaming Association, which represents the nine racinos.

For the current fiscal year, he said the racinos will account for about $830 million in education aid and just under $200 million for the horse industry.

Featherstonhaugh said the VLT revenue helps support breeders and racing purses and has become all the talk of Kentucky. That racing state has noticed New York's success this year with higher purses at the three New York Racing Association tracks, which have generated more betting, and an investment in horse breeders, which has brought back to life farms and attracted stallions.

He noted recent signs from Kentucky's state Legislature and governor that indicated they wanted to create a gaming system, which would also subsidize their racing industry, potentially at a larger percentage than the New York model.

"I think it's fair to say that there will be a reaction to what happened in New York," Featherstonhaugh said.

But there is some indication from Gov. Andrew Cuomo that he wants to change the percentage of VLT revenue going to the horse industry.

New York Thoroughbred Horsemen Association President Rick Violette, a non-voting member of the NYRA board, said the ambiguity surrounding VLT revenue now has put future development of the state's horse industry into a holding pattern. He stressed that horsemen and breeders like to make long-term plans, which isn't possible when New York's racing and gambling industries are up in the air heading into 2013, with VLT revenue possibly being diverted, a new state Gaming Commission being created and live-table gambling likely to be approved.

Updated, 11:35 p.m.: Also at the hearing, Michael Nolan touted the potential collaboration of a casino, race track and off-track betting corporation being rolled into one operations.

Nolan is the executive vice president and COO of the Western OTB and Batavia Downs Casino operation, which captures all three aspects of gaming in the state. "The synergies are amazing," he told a handful of Assembly members.

This model, he argued, essentially put the public in direct control of a casino, because the OTB system serves the counties.

Nolan said this synergy could be a model going forward, as the state considers the adoption of live-table gaming. He added that having the resources combined in one location ensured that people would utilize all their options and not just play the casino games.

This model is also more cost-effective, because it reduces administrative costs. Nolan said that without the business model available to the Western OTB, it might have collapsed like the New York City OTB.

He was only elusive when it came to naming where the seven live-table casinos should be located. "We should be one," was all he would say.

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